Actual Cash Value vs. Depreciated Value

Actual Cash Value vs. Depreciated Value


This topic is on how insurance companies
pay out claims and how it has changed over the years. In the past, the insurance
companies would come out, assess your damage, and then give you a quote or an
amount to replace the entire amount, which we call the replacement cost. Well, what
they found is that a lot of the people were taking those checks and not doing
what was right and getting the home repaired, and pocketing the extra money.
In other cases, maybe their quote was low, so they were getting a complaint that
they didn’t pay out enough. Well to correct this, they now completely changed
how they do it. Now when they come out, they’ll find out how much of the
replacement cost value is, but then they’ll minus out the depreciation, which
is how much that product has actually depreciated. They minus that out, plus
your deductible, and then they send you what’s called the actual cash value. How
much the actual cash value is as it stands that day. Most homeowners think
that that’s the only check that they’re going to be getting from the insurance
companies, because most insurance companies don’t disclose this to you, but
what you’re supposed to do is then get the work done, send the final invoice of
what you had done to the insurance company, and then they released the
depreciation check. A lot of our customers have asked us to lower the
price to meet the actual cash value amount, not knowing or not realizing that
the insurance company still owed them the other half or the
depreciation portion. Once you send off that invoice, they then send out the
additional check in the form of a supplement.

About the Author: Michael Flood

Leave a Reply

Your email address will not be published. Required fields are marked *